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December 27, 2005.


The opinion of the court was delivered by: JOSEPH GREENAWAY JR., District Judge


This matter comes before the Court on the Motion for Summary Judgment by Defendant National Senior Associates Company, LLC ("NSAC") and the Cross-Motion for Summary Judgment by Plaintiff IQ Group, Ltd. ("IQ"), pursuant to FED. R. CIV. P. 56. For the reasons set forth below, all motions and cross-motions for summary judgment shall be denied.


  These motions arise in the context of a dispute between business competitors. IQ and Wiesner Publishing, LLC ("Wiesner") are businesses that provide advertising services for insurance companies: they send ads by email to insurance agents. In 2003, National Senior Associates Company, LLC ("NSAC") and Capital Care, Inc. ("Capital Care"), insurance companies, both hired IQ to send advertisements. NSAC and IQ dispute who created the NSAC ad, and thereby who is entitled to claim authorship and hold the copyright. IQ distributed copies of the Capital Care and NSAC ads via email to insurance agents; the ads sent by IQ displayed a graphic described by IQ as a logo. The IQ logo consists of the outline of a capital "Q" with the outline of a lower-case "I" in the center. Both outlines are shaded, as if in graphical relief. The ads also contained a hyperlink that, when clicked, directed the user to a page of IQ's website which IQ claims contained copyright notices.

  After IQ had distributed the NSAC and Capital Care ads, both NSAC and Capital Care hired Wiesner to distribute the ads via email. Both NSAC and Capital Care provided Wiesner with the ads that IQ distributed. Wiesner removed the IQ logo and hyperlink, added new information so that responses to the ads would go to NSAC and Capital Care, and then copied and distributed the ads via email.

  IQ subsequently applied to the U.S. Copyright Office for copyright registration, claiming authorship of the NSAC and Capital Care ads. IQ obtained copyright registrations as of October 22, 2003. IQ then filed suit against Wiesner, NSAC, Capital Care and other parties, claiming copyright infringement, violations of the Digital Millennium Copyright Act ("DMCA"), and breach of contract by NSAC, which is alleged to have used IQ's artwork without permission.

  NSAC filed a motion for summary judgment on these issues: 1) The court lacks subject-matter jurisdiction over the copyright infringement claims because of fatal defects in pleading; 2) the copyright registration for the NSAC ad is invalid; and 3) IQ cannot prevail on its breach of contract claim. IQ filed a cross-motion for summary judgment on these issues: 1) NSAC has infringed IQ's copyright on the NSAC ad; 2) IQ is entitled to increased statutory damages for NSAC's allegedly willful infringement of the copyright on the NSAC ad; and 3) NSAC violated the DMCA, 17 U.S.C. § 1202, with regard to the NSAC ads.


  I. Governing Legal Standards

  A. Standard for a Rule 56 Motion for Summary Judgment

  Summary judgment is appropriate under FED. R. CIV. P. 56(c) when the moving party demonstrates that there is no genuine issue of material fact and the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996). In making this determination, the Court must draw all reasonable inferences in favor of the non-movant. Hullett v. Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 111 (3d Cir. 1994); Nat'l State Bank v. Fed. Reserve Bank of N.Y., 979 F.2d 1579, 1581 (3d Cir. 1992).

  Once the moving party has satisfied its initial burden, the party opposing the motion must establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey Township, 772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary judgment cannot rest on mere allegations and instead must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). "[U]nsupported allegations . . . and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also FED. R. CIV. P. 56(e) (requiring nonmoving party to "set forth specific facts showing that there is a genuine issue for trial"). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, . . . there can be `no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex, 477 U.S. at 322-23). In determining whether there are any issues of material fact, the Court must resolve all doubts as to the existence of a material fact against the moving party and draw all reasonable inferences — including on issues of credibility — in favor of the non-moving party. Watts v. Univ. of Del., 622 F.2d 47, 50 (3d Cir. 1980).

  II. Defendant's Motion for Summary Judgment

  A. Subject Matter Jurisdiction as to the ...

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